In a veiled threat, the Indian arm of the St Louis-based firm said that Mahyco Monsanto Biotech (India) would have no choice but to re-evaluate every aspect of “our position in India”, if the committee recommends a sharp, mandatory cut in the trait fee.

“It is difficult for MMB to justify bringing new technologies into India in an environment where such arbitrary and innovation stifling government interventions make it impossible to recoup research and development investments,” Shilpa Divekar Nirula, CEO, Monsanto India Region, said in a statement.

Lower royalty

Monsanto licenses the Bt technology to MMB – a joint venture it formed with Mahyco – which in turn sub-licenses it to seed companies, charging a trait fee or royalty. The Union government panel has reportedly recommended cutting the price BG-II cottonseed by about ₹130 from ₹930 a packet (of 450 gm) last year to ₹800 and ₹635 (₹830) for BG-I for the upcoming kharif season.

Bulk of the reduction comes in the form of a lower royalty to MMB that is put at ₹49. This component varies from State to State. While it is ₹50 in Telangana, Andhra Pradesh puts it at ₹90.

The committee, which met in Delhi on Thursday, had submitted its recommendations to the government for a final decision. Amidst litigations and requests from farmers’ organisations, the government has decided to announce a uniform price for the cottonseed for all cotton-growing States.

The committee, with representatives from various stakeholders, was formed after the government issued Cotton Seed Price Control Order (CSPCO). MMB has moved the Delhi High Court challenging the move.

Industry and media reports suggest that CSPCO plans to recommend an imposition of 70 per cent reduction in the trait fees paid on Bt cottonseed. Fixing of the fees will affect MMB’s business in the country.

The Centre is attempting to reduce the farmer’s expenditure on cottonseeds by controlling its prices. On an average, a cotton farmer spends three per cent of his total farming cost on seeds.

MMB, in a statement, said that the Centre’s intervention and any recommendation to reduce trait fees, if made, comes against the backdrop of a bilateral dispute where few licensees refused to honour their commitments to pay MMB, over ₹450 crore. They have collected these amounts from the cotton farmers in Kharif of 2015.

Pricing row

The prices of BG-I and BG-II vary in different States, with local governments issuing orders every year giving a break-up of actual seed cost and the royalty, which has become a bone of contention between the States and farmers’ organisations and seed companies on the other.

This row has resulted in a virtual split in the seed companies, with Monsanto and MMB and nine other firms supporting their view and a host of others in the National Seed Association of India (NSAI) that backed the Central government price order.

The Association of Biotechnology Enabled Enterprises Agriculture Group (ABLE-AG), which comprises 11 seed firms including Monsanto, MMBL, Syngenta, has opposed the recommendation.

“If the reports come true, it will not be in favour of the farmers in the long run and will violate the principle of free market economics. When the cost of producing cotton runs in several thousands, saving hundred rupees will not benefit the farmers,” Shivendra Bajaj, Executive Director of ABLE-AG, said.